Israel

Middle Eastern Realities

Barack Obama was not the candidate in last year’s presidential race who reminded us the most of a used-car salesman — that distinction went to his eventual running mate, Joe Biden. Since taking office, though, President Obama has sounded increasingly like the nation’s car-salesman-in-chief. Announcing his plan to instate strict caps on auto emissions — a move his own administration says could add around $2,000 to the cost of each new vehicle by 2016 — Obama said, “If you buy a car, your investment in a more fuel-efficient vehicle as a result of this standard will pay off in just three years.”

Obama’s hard sell — “This is a winning proposition for folks looking to buy a car” — is premised on some sketchy math. For one thing, experts outside the administration say the added per-vehicle cost could go as high as $8,000. You can’t save money getting more miles to the gallon if you can’t afford the car in the first place. For another, those estimated savings are based on the administration’s ability to predict gas prices seven to ten years into the future. If gas is still as cheap as it is now, savings on better mileage could be minimal.

Even if gas prices go up, the savings Obama predicts might not materialize. Cars that are more fuel efficient are cheaper to drive, increasing the likelihood that people will drive more. That wouldn’t just offset the savings — it would also offset promised reductions in greenhouse-gas emissions and oil imports, to say nothing of adding to congestion.

Then there is the evidence that tighter fuel-economy standards yield auto fleets that are more dangerous in accidents. The easiest way to make a car more fuel efficient is to make it lighter. Researchers from institutions as diverse as the Brookings Institution, the National Research Council, and the Competitive Enterprise Institute have shown that after the first federal fuel-economy standards went into effect in the 1970s, cars got lighter and traffic fatalities increased as a result. The National Research Council study found that federal fuel-economy standards contribute to about 2,000 deaths per year.

The Rose Garden ceremony during which Obama announced his plan featured the participation of auto-industry leaders, who just a few years ago were adamantly opposed to stricter standards on the grounds that compliance would be too costly. A few nationalizations later, everyone is on board. Industry leaders claimed a small victory, arguing that this one national standard will prevent the dreaded scenario in which each state is allowed to set its own standard. But this claim rings false: The industry’s concern over state standards arose from California’s attempt to impose draconian restrictions on auto emissions that would have become the de facto national standard due to the state’s large size. Obama’s plan simply makes California’s targets the de jure national standard. How is that a victory for the automakers?

Clearly, the industry’s willingness to go along with Obama’s plan has more to do with the fact that A) The new restrictions were inevitable, given the alignment of the government, and B) two of the country’s three major car companies owe their continued existence to said government. This should serve as a lesson on the dangers of what the Troubled Asset Relief Program has become. The Democrats control the White House and both houses of Congress. Now, thanks to the transformation of TARP into an all-purpose slush fund, they control a growing slice of the private sector, too.

End-Run around Obama: 76 Senators Demand Peace without Terror

More than 250 Congressmen, including 76 senators, have signed a letter to U.S. President Barack Obama, telling him “that peace cannot come while terrorism continues to wrack Israel.”

The letter was initiated on April 30 by Democratic Senators Christopher Dodd and Arlen Specter and Republican Senators Johnny Isakson and John Thune, according to New York Times journalist Edwin Black. He wrote on The Cutting Edge website that the House of Representatives version was rallied by Majority Leader Steny Hoyer and House Republican Whip Eric Cantor.

The letter has been signed by 195 members of the House in addition to the 76 senators, and it sends a clears message to the White House about Israel’s security.

“The notion that Obama was linking Jerusalem’s negotiations with Palestinians to its ability to thwart nuclear annihilation rankled many in the Jewish and non-Jewish Israel support community,” Black wrote. “In a word, Israel has gone over the president’s head and appealed directly to the Congress.”

The Congressmen wrote the president, a day after he met with Prime Minister Binyamin Netanyahu, “We are writing out of our shared concern over 60 years of conflict in the Middle East, and a mutual desire to see peace between Israel and its Arab neighbors.

“We believe that achievement of a lasting peace between Israelis and Palestinians requires adherence to some key principles. These include an understanding that while the United States has an important role to play, the parties themselves are the ones who will need to negotiate and live with whatever agreement is reached. As we work closely with our democratic ally, Israel, we must take into account the risks it will face in any peace agreement.

“We must also continue to insist on the absolute Palestinian commitment to ending terrorist violence and to building the institutions necessary for a viable Palestinian state living side-by-side, in peace with the Jewish state of Israel.”

Bankrupt companies making 39 mpg autos. Are we nuts?

At the end of his Rose Garden explanation yesterday of the new U.S. fuel-efficiency standards, President Obama remarked on the good that can be accomplished when we are “working together.” The President may be getting ahead of himself. Watching the unlikely coalition arrayed behind him as Mr. Obama committed the U.S. to an astonishing passenger-car mileage average of 39 miles per gallon by 2016, it looks truer to say we are merely standing together in this adventure, for better or worse.

Mr. Obama’s fleet-mileage partners yesterday included the two auto companies that have fallen into his arms, Chrysler and GM, still-independent Ford, the major foreign manufacturers, United Auto Workers chief Ron Gettelfinger, and beaming representatives from the Sierra Club, Environmental Defense Fund and the Union of Concerned Scientists.

All that’s left to arrive at the President’s new destination for the American way of driving are huge, unanswered questions about technology, financing and the marketability of cars that will be small and expensive.

Start with technology. The President’s proposed standards would raise fuel economy goals higher and faster than even the National Highway Transportation Safety Administration believes is practical. Last year, NHTSA issued a proposed rule making that would have raised fuel economy to 32.2 mpg by 2015 for cars and light trucks combined. Its 376-page report notes that “the resources used to meet overly stringent CAFE standards . . . would better be allocated to other uses such as technology research and development, or improvements in vehicle safety.”

The new U.S. fleet will almost certainly be made up of hybrids and electric cars. This comports with the explicit intention of the President and his environmental partners to back out fossil fuels. One may ask: Once Detroit is forced to build these cars, will free Americans want to buy them, at any price?

Unless we outlaw the bigger cars that recent sales figures have shown Americans prefer any time gas prices fall below $4 per gallon, Detroit will need help marketing these small vehicles. As GM’s Bob Lutz put it not long ago, “Very few people will want to change what has been their ‘nationality given’ right to drive big and bigger if the price of gas is $1.50 or $2 or even $2.50. Those prices will put the CAFE-mandated manufacturers at war with their customers.”

All solutions to this problem flow from Washington. One would be to give substantial tax subsidies to buyers. Another would be to impose a federal gas tax to jack up the price of gasoline to $4 per gallon and keep it there. This is the solution that keeps Europeans driving small cars with tiny engines. High gasoline prices have become a political third rail in U.S. politics, and the Obama Administration insists it isn’t interested in subsidies or taxes.

That puts the burden back on the beleaguered auto makers. The Detroit Three already sell small cars at a loss to meet the current 27.5 mpg fleet average. The car companies may hope that if the whole industry is forced to move up the fuel-economy ladder, consumers will have no choice other than to buy these cars. But experience suggests companies that have specialized in making smaller cars, such as the Japanese-owned auto makers, are more likely to be able to sell them at a profit.

Mr. Obama said a lot yesterday about the promised benefits of all this for the environment but not much about return on investment for the auto sellers. These public goals notwithstanding, it still looks as if Ford, Chrysler and GM will be making cars they can’t sell, or can’t sell profitably. That might not be a problem if you’re now Gettelfinger Motors. But still-independent Ford has private shareholders and creditors to answer. While GM and Chrysler attempt to meet the new standards with taxpayer money, Ford will have to do so on its own.

The real carrot the Administration offered the industry yesterday was a detour from the nightmare of state-mandated standards. California has been seeking a waiver from the Administration to impose its own higher mileage standards, and a number of other states have followed suit. The Obama national proposal indeed offers the industry what he called “consistency.”

So yes, it is possible to see why this disparate group came together yesterday. The UAW may soon be the government’s partner in ownership of GM and Chrysler, and it has a strong incentive not to bite the hand feeding it a huge equity stake in the car makers. Ford and the other foreign-owned auto makers, which will have to raise private capital to make changes that U.S. taxpayers will fund at Chrysler and GM, no doubt want to maintain their political viability by not standing athwart this regulatory steamroller.

We wish these folks luck “working together” with the Obama auto-design team. One thing seems certain by 2016: Taxpayers will be paying Detroit to make the cars Americans don’t want, and then they will pay again either through (trust us) a gas tax or with a purchase subsidy. Even the French must think we’re nuts.

No Degree for Obama: An Embarrassment to University

In explaining why Arizona State University (my employer) won’t award President Obama an honorary degree when he speaks at next month’s commencement, a university spokeswoman told the Associated Press:

“It’s our practice to recognize an individual for his body of work, somebody who’s been in their position for a long time… His body of work is yet to come. That’s why we’re not recognizing him with a degree at the beginning of his presidency.”

That is one of the more incredible — as in not credible — statements I’ve ever seen from a PR person. Period.

There’s surely more to this story than publicly known — even if it’s simply a matter of a cascading screw-up, which is entirely possible, as opposed to a more political situation. Some reporting by news organizations would be helpful.

Whatever led the university leaders to make this decision, they should realize that they’ve embarrassed themselves and their institution.